Thrive’s Joshua Kushner chides Silicon Valley VCs over AI euphoria

The AI opportunity is huge, but “it would also be a grave error in our minds to let excitement weaken our investment discipline,” Kushner warns in his first-ever investment letter.

A letter that chides Silicon Valley

In Thrive Capital’s first-ever investor letter, founder Joshua Kushner has some unexpected things to say about his venture capital rivals on the West Coast. “It is difficult to overstate the magnitude of the opportunity,” Kushner wrote about AI in the letter, leaked to Bloomberg. “It would also be a grave error in our minds to let excitement weaken our investment discipline. … Within Silicon Valley in particular, the industry can become fixated on hyperincremental technological turns rather than where the technology ultimately leads.”

While his secretive New York-based firm, just like those in Silicon Valley, is betting heavily on AI, Thrive is doing so differently, he argues. There’s no so-called spray-and-pray investing. Thrive tends to go big on the companies it backs. Bloomberg estimates about 90% of its capital is poured into the top 15 investments in each fund. That makes Thrive, he contends, a company of independent thinkers. “We are independent because markets move between fear and enthusiasm, and neither is a substitute for judgment.”

Concentration versus outliers

His comments are in direct contrast to one of the basic premises of Silicon Valley venture capital: that it is a business of “outliers” as espoused by Marc Andreessen. In the “outlier” view, a VC firm makes a lot of bets prepared to lose money on many - even most - of them. The few big hits will be so lucrative that they will cover the losers and much, much more. That philosophy leaves VCs forever looking for the next OpenAI or another mega hit. It can also lead to, as we saw during the post-pandemic lean years, cutting ongoing support for startups not deemed to be on track to be the biggest winners.

In contrast, Kushner writes, “We believed an investment firm could be opportunistic across stage, sector,